On
February 22, 2017, the Court held a hearing prior to trial on
two motions, (1) a motion to amend the pleadings filed by
Appellee/ Plaintiff-Below, and (2) a motion to dismiss filed
by Appellant/ Defendant-Below. The Court granted the motion
to amend to allow Appellee/ Plaintiff-Below to correct its
name from Network Electrical Contracting, Inc. to Network
Contracting, Inc. In response to information presented during
the motion to dismiss hearing, the Court declined to proceed
to trial and entered judgment on the record against Appellee/
Plaintiff-Below for failure to plead on appeal, pursuant to
Ct. Com. PL Civ. R. 55(bb2). Given the unusual nature of this
case, the Court informed the parties it would prepare a
written decision. This is the Court's decision.

PROCEDURAL
HISTORY AND FACTS

On July
12, 2016, the JP Court entered judgment against
Appellant/Defendant-Below Elbert Smalls ("Smalls")
arising from Smalls' failure to pay for home electrical
wiring services rendered by Appellee/Plaintiff-Below Network
Contracting, Inc ("NCI"). Smalls filed a timely
appeal de novo to this Court on July 27, 2016. The
parties filed pleadings and various motions. On January 25,
2017, Smalls filed an amended motion to dismiss. In this
motion, Smalls argued the Court should dismiss the action and
vacate the ruling below because NCI was forfeited by the
State of Maryland on October 1, 2013, and therefore could not
have contracted with him. Upon hearing the relief requested
by Smalls, a pro se litigant, the Court interpreted
the filing as a motion for entry of judgment. During the
hearing, Smalls entered into evidence a signed document under
seal, dated January 13, 2017, from the State of Maryland
Department of Assessments and Taxation.[1] According to that
document, NCI was forfeited on October 1, 2013. Counsel for
NCI verified that NCI's corporate charter was forfeited
and has not been revived. Neither party disputed that the
Court should apply Maryland law to determine the effect of
corporate charter forfeiture.[2]

DISCUSSION

According
to Ct. Com. PL Civ. R. 55(bb2), "when an appellee having
the duty of serving the complaint or other first pleading
fails to do so as required by Rule 72.3(a), judgment shall be
entered against appellee for failure to plead." Pursuant
to Maryland law, when a corporation is forfeited, its charter
is "repealed, annulled, and forfeited, and the powers
conferred by law on the corporation[] are inoperative, null,
and void as of the date of the
proclamation."[3] Maryland's highest court has held that
except for the limited purposes of "winding up, "
an un-revived forfeited corporation has no authority to sue
or be sued because the entity does not exist.[4] Complaints filed
by forfeited corporations are deemed
"nullities."[5] Because NCI's charter was forfeited in
2013, it is a nonentity that does not exist. Furthermore,
this suit cannot be part of a corporate wind up because
forfeiture occurred well before the contract at issue was
formed. NCI had no legal ability to sue in JP Court or to
appear before this Court, and the complaint on appeal is a
"nullity." Therefore, NCI failed to plead, and
judgment must be entered for Smalls.

Though
not raised, the Court considered the potential application of
the mirror image rule, which strips this Court of
jurisdiction to hear appeals de novo that fail to
join identical parties and raise identical issues to those in
the court below.[6] When deciding whether identical issues
have been raised, the Court looks to what has been
"heard and decided" below.[7] In this case, given the date
of the forfeiture notice and the contents of the JP Court
decision, [8] it is unlikely the JP Court heard and
decided the forfeiture issue. However, the mirror image rule
would not apply in this situation because NCI's nullity
is not going toward a substantive issue, but rather is being
used to determine whether the lawsuit at issue is fatally
defective. Even if the mirror image rule did apply,
"almost no rule is absolute, and the paramount
requirement is to see that justice is
done."[9] It would be improper and unjust to allow a
nonexistent "ghost" party to avail itself of
Delaware courts.

Finally,
though the parties proffered arguments about the substantive
question of whether a Maryland corporation with a forfeited
charter can enter into a contract, the Court concluded it
need not reach that issue as this case must fail for the
procedural reasons discussed above.

CONCLUSION

For
these reasons, the Court entered judgment in favor of
Appellant/ ...

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